Be sure to first check with your lender if this is an option for your loan.
This extra payment may be applied directly to your principal balance. When you split your payments like this, you’re making the equivalent of 1 extra monthly payment a year (26 bi-weekly payments totals 13 monthly payments).
Wells fargo amortization calculator full#
If you pay $200 extra a month towards principal, you can cut your loan term by more than 8 years and reduce the interest paid by more than $44,000.Īnother way to pay down your mortgage in less time is to make half-monthly payments every 2 weeks, instead of 1 full monthly payment. If you pay $100 extra each month towards principal, you can cut your loan term by more than 4.5 years and reduce the interest paid by more than $26,500. If you make your regular payments, your monthly mortgage principal and interest payment will be $955 for the life of the loan, for a total of $343,739 (of which $143,739 is interest). Let’s say you have a 30-year fixed-rate mortgage for $200,000, with an interest rate of 4%. Here are a few example scenarios with some estimated results for additional payments. Even small additional principal payments can help. Because interest is calculated against the principal balance, paying down the principal in less time on your mortgage reduces the interest you’ll pay. When you make an extra payment or a payment that's larger than the required payment, you can designate that the extra funds be applied to principal. This reduction of debt over time is amortization. Assuming regular payments, more of each following payment pays down your principal.
Typically, the majority of each payment at the beginning of the loan term pays for interest and a smaller amount pays down the principal balance. For example, if you make a monthly mortgage payment, a portion of that payment covers interest and a portion pays down your principal. Mortgage amortization is the reduction of debt by regular payments of principal and interest over a period of time. Do you have a 15- or 30-year fixed-rate loan that you’d like to pay down faster? You might find that making extra payments on your mortgage can help you repay your loan more quickly, and with less interest than making payments according to loan's original payment terms.
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